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Lenk, TBender, CGlinka, P (2020). The German Debt Brake Approaches for an Improvement of the Technical Design. Vierteljahrshefte zur Wirtschaftsforschung, 89(1), 31-44. https://doi.org/10.3790/vjh.89.1.31
Lenk, Thomas Bender, Christian Glinka, PhilippLenk, Thomas Bender, Christian Glinka, PhilippLenk, Thomas Bender, Christian Glinka, Philipp (2020). "The German Debt Brake Approaches for an Improvement of the Technical Design" Vierteljahrshefte zur Wirtschaftsforschung, vol. 89no. 1, 2020 pp. 31-44. https://doi.org/10.3790/vjh.89.1.31
Lenk, TBender, CGlinka, P (2020). The German Debt Brake Approaches for an Improvement of the Technical Design. Vierteljahrshefte zur Wirtschaftsforschung, Vol. 89 (Issue 1), pp 31-44. https://doi.org/10.3790/vjh.89.1.31

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The German Debt Brake Approaches for an Improvement of the Technical Design

Lenk, Thomas | Bender, Christian | Glinka, Philipp

Vierteljahrshefte zur Wirtschaftsforschung, Vol. 89 (2020), Iss. 1 : pp. 31–44

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Thomas Lenk, University of Leipzig

  • Prof. Dr. Thomas Lenk has held the Chair of Public Finance since 1993 and is Director of the “Institut für Öffentliche Finanzen and Public Management” at the University of Leipzig. He has been Deputy Rector of the University of Leipzig since 2011 and a member of the Independent Advisory Council of the Stability Council since 2017. He is also Chairman of the Board of the “Kompetenzzentrum Öffentliche Wirtschaft, Infrastruktur und Daseinsvorsorge e. V. (KOWID)” and Director of the “Kompetenzzentrum für Kommunale Infrastruktur Sachsen (KOMKIS)”. For many years he has been an expert for public financial science and financial policy issues within the framework of legislative processes.
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Christian Bender, University of Leipzig

  • Christian Bender, M.Sc. has been research assistant at the Chair for Public Finance since 2019. He studied Socio-Economics at the University of Hamburg and Economics with a specialization in Public Economics at the University of Leipzig as well as the Norwegian University of Science and Technology (NTNU) in Trondheim. His research focusses on fiscal rules and European fiscal policy.
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Philipp Glinka, University of Leipzig

  • Philipp Glinka, M. Sc. has been a research assistant at the Chair of Finance at the University of Leipzig since 2014. He studied Business Administration at the Berlin School of Economics and Law and later at the University of Leipzig. His research focuses on fiscal federalism and financial relations between the federal and state governments.
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Abstract

Summary: This article examines the German debt brake from a technical point of view. By designing the debt brake on the basis of the EU method, it should be possible to achieve an adequate division between the cyclical and structural components of the budget balance, while at the same time pursuing a countercyclical fiscal policy. However, recent studies suggest that the mechanics of the debt brake are of a rather pro-cyclical in nature. This paper focuses on the behavior of the NAWRU – a central element of the production function approach – as well as revisions, which both seem to be a source of a pro-cyclical influence towards the German debt brake. Additionally, reform proposals are outlined which show that a change of the Basic Law is not necessary in order to improve the dynamics of the fiscal rule at hand.